Complete Home & Office Legal Guide/Complete Home and Office Legal Guide (Chestnut) (1993).ISO/stat/ucc/ucc7.asc

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/* UCC Article 7 regarding bills of lading and documents of title
follow. */

ARTICLE 7

WAREHOUSE RECEIPTS, BILLS OF LADING AND OTHER DOCUMENTS OF TITLE

PART 1. GENERAL

Section

7-101.  Short Title.

7-102.  Definitions and Index of Definitions.

7-103.  Relation of Article to Treaty, Statute, Tariff,
Classification or Regulation.

7-104.  Negotiable and Non-negotiable Warehouse Receipt, Bills of
Lading or Other Document of Title.

7-105.  Construction Against Negative Implication.

PART 2. WAREHOUSE RECEIPTS: SPECIAL PROVISIONS

7-201.  Who May Issue a Warehouse Receipt; Storage Under
Government Bond.

7-202.  Form of Warehouse Receipt; Essential Terms; Optional
Terms.

7-203.  Liability for Non-receipt or Misdescription

7-204.  Duty of Care; Contractual Limitation of Warehouseman's
Liability.

7-205 Title Under Warehouse Receipt Defeated in Certain Cases.
7-206.  Termination of Storage at Warehouseman's Option.

7-207.  Goods Must Be Kept Separate; Fungible Goods.

7-208.  Altered Warehouse Receipts.

7-209.  Lien of Warehouseman.

7-210.  Enforcement of Warehouseman's Lien.

PART 3.  BILLS OF LADING: SPECIAL PROVISIONS

7-301.  Liability for Non-receipt or Misdescription; "Said to
Contain"; "Shipper's Load and Count"; Improper Handling.

7-302.  Through Bills of Lading and Similar Documents.


7-303.  Diversion; Reconsignment; Change of Instructions.

7-304.  Bills of Lading in a Set.

7-305.  Destination Bills.

7-306.  Altered Bills of Lading.

7-307.  Lien of Carrier.

7-308.  Enforcement of Carrier's Lien.

7-309.  Duty of Care; Contractual Limitation of Carrier's
Liability.

PART 4. WAREHOUSE RECEIPTS AND BILLS OF LADING: GENERAL
OBLIGATIONS

7-401.  Irregularities in Issue of Receipt or Bill or Conduct of
Issuer.

7-402.  Duplicate Receipt or Bill; Overissue.

7-403.  Obligation of Warehouseman or Carrier to Deliver; Excuse.
7-404.  No Liability for Good Faith Delivery Pursuant to Receipt
or Bill.

PART 5. WAREHOUSE RECEIPTS AND BILLS OF LADING: NEGOTIATION AND
TRANSFER

7-501.  Form of Negotiation and Requirements of Due Negotiation
7-502.  Rights Acquired by Due Negotiation.

7-503.  Document of Title to Goods Defeated in Certain Cases.
7-504.  Rights Acquired in the Absence of Due Negotiation; Effect
of Diversion; Seller's Stoppage of Delivery.

7-505.  Indorser Not a Guarantor for Other Parties.

7-506.  Delivery Without Indorsement: Right to Compel
Indorsement.

7-507.  Warranties on Negotiation or Transfer of Receipt or Bill.
7-508.  Warranties of Collecting Bank as to Documents.

7-509.  Receipt or Bill: When Adequate Compliance With Commercial
Contract.

PART 6.  WAREHOUSE RECEIPTS AND BILLS OF LADING: MISCELLANEOUS
PROVISIONS

7-601.  Lost and Missing Documents.

7-602.  Attachment of Goods Covered by a Negotiable Document.

7-603.  Conflicting Claims; Interpleader.

ARTICLE 7
WAREHOUSE RECEIPTS, BILLS OF LADING AND OTHER DOCUMENTS OF TITLE

PART 1
GENERAL

7-101. Short Title.

    This Article shall be known and may be cited as Uniform
Commercial Code -- Documents of Title.

    7-102. Definitions and Index of Definitions.

    (1) In this Article, unless the context otherwise
requires:

    (a) "Bailee" means the Pprson who by a warehouse receipt,
bill of lading or other document of title acknowledges Possession
of goods and contracts to deliver them.

    (b) "Consignee" means the person named in a bill to whom
or to whose order the bill promises delivery.

    (c) "Consignor means the person named in a bill as the
Person from whom the goods have been received for shipment.

    (d) "Delivery order" means a written order to deliver
goods directed to a warehouseman, carrier or other Person who in
the ordinary course of business issues warehouse receipts or
bills of lading.

    (e) "Document" means document of title as defined in the
general definitions in Article 1 (Section 1-201).

    (f) "Goods" means all things which are treated as movable
for the purposes of a contract of storage or transportation.

    (g) "Issuer" means a bailee who issues a document except
that in relation to an unaccepted delivery order it means the
person who orders the possessor of goods to deliver. Issuer
includes any Person for whom an agent or employee purports to act
in issuing a document if the a gent or employee has real or
apparent authority to issue documents, notwithstanding that the
issuer received no goods or that the goods were misdescribed or
that in any other respect the agent or employee violated his
instructions.

    (h) "Warehouseman" is a Person engaged in the business of
storing goods for hire.

    (2) Other definitions applying to this Article or to
specified Parts thereof, and the sections in which they appear
are:

    "Duly negotiate"    Section 7-501.

    "Person entitled under the document" Section 7-403(4).

    (3) Definitions in other Articles applying to this
Article and the sections in which they appear are:

    "Contract for sale".    Section 2-106.

    "Overseas".    Section 2-323.

    "Receipt" of goods.    Section 2-103.

    (4) In addition Article 1 contains general definitions
and principles of construction and interpretation applicable
throughout this Article.

7-103. Relation of Article to Treaty, Statute, Tariff,
Classification or Regulation.

To the extent that any treaty or statute of the United States,
regulatory statute of this State or tariff, classification or
regulation filed or issued pursuant thereto is applicable, the
provisions of this Article are subject thereto.

7-104. Negotiable and Non-negotiable Warehouse Receipt, Bill of
Lading or Other Document of Title.

    (1) A warehouse receipt, bill of lading or other document
of title is negotiable

    (a) if by its terms the goods are to be delivered to
bearer or to the order of a named person; or

    (b) where recognized in overseas trade, if it runs to a
named person or assigns.

    (2) Any other document is non-negotiable. A bill of
lading in which it is stated that the goods are consigned to a
named person is not made negotiable by a provision that the goods
are to be delivered only against a written order signed by the
same or another named person.

7-105. Construction Against Negative Implication.

The omission from either Part 2 or Part 3 of this Article of a
provision corresponding to a provision made in the other Part
does not imply that a corresponding rule of law is not
applicable.


PART 2
Warehouse Receipts: SPECIAL PROVISIONS

7-201. Who May Issue a Warehouse Receipt; Storage Under
Government Bond.

    (1) A warehouse receipt may be issued by any
warehouseman.

    (2) Where goods including distilled spirits and
agricultural commodities are stored under a statute requiring a
bond against withdrawal or a license for the Issuance of receipts
in the nature of warehouse receipts, a receipt issued for the
goods has like effect as a warehouse receipt even though issued
by a person who is the owner of the goods and is not a
warehouseman.

/* This is similar to the other sections of the Uniform
Commercial Code in that whether or not a person is licensed if
they act in the capacity stated they are still subject to the
code. */

    7-202. Form of Warehouse Receipt; Essential Terms;
Optional Terms.

    (1) A warehouse receipt need not be in any particular
form.

    (2) Unless a warehouse receipt embodies within its
written or printed terms each of the following, the warehouseman
is liable for damages caused by the omission to a person injured
thereby:

    (a) the location of the warehouse where the goods are
stored;

    (b) the date of issue of the receipt;

    (c) the consecutive number of the receipt;

    (d) a statement whether the goods received will be
delivered to the bearer, to a specified person, or to a specified
person or his order;

    (e) the rate of storage and handling charges, except that
where goods are stored under a field warehousing arrangement a
statement of that fact is sufficient on a non-negotiable receipt;

    (f) a description of the goods or of the packages
containing them

    (g) the signature of the warehouseman, which may be made
by his authorized agent;

    (h) if the receipt is issued for goods of which the
warehouseman is owner, either solely or jointly or in common with
others, the fact of such ownership; and

    (i) a statement of the amount of advances made and of
liabilities incurred for which the warehouseman claims a lien or
security interest (Section 7-209). If the precise amount of such
advances made or of such liabilities incurred is, at the time of
the issue of the receipt, unknown to the warehouseman or to his
agent who issues it, a statement of the fact that advances have
been made or liabilities Incurred and the purpose thereof is
sufficient.

    (3) A warehouseman may insert in his receipt any other
terms which are not contrary to the provisions of this Act and do
not impair his obligation of delivery (Section 7-403) or his duty
of care (Section 7-204). Any contrary provisions shall be
ineffective.

7-203. Liability for Non-receipt or Misdescription.

A party to or purchaser for value in good faith of a document of
title other than a bill of lading relying in either case upon the
description therein of the goods may recover from the issuer
damages caused by the non-receipt or misdescription of the goods,
except to the extent that the document conspicuously indicates
that the issuer does not know whether any part or all of the
goods in fact were received or conform to the description, as
where the description is in terms of marks or labels or kind,
quantity or condition, or the receipt or description is qualified
by "contents, condition and quality unknown", "said to contain"
or the like, if such indication be true, or the party or
purchaser otherwise has notice.

    7-204. Duty of Care; Contractual Limitation of
Warehouseman's Liability.

    (1) A warehouseman is liable for damages for loss of or
injury to the goods caused by his failure to exercise such care
in regard to them as a reasonably careful man would exercise
under like circumstances but unless otherwise agreed he is not
liable for damages which could not have been avoided by the
exercise of such care.

    (2) Damages may be limited by a term in the warehouse
receipt or storage agreement limiting the amount of liability in
case of loss or damage, and setting forth a specific liability
per article or item, or value per unit of weight, beyond which
the warehouseman shall not be liable; provided however, that such
liability may on written request of the bailor at the time of
signing such storage agreement or within a reasonable time after
receipt of the warehouse receipt be increased on part or all of
the goods thereunder, in which event increased rates may be
charged based on such increased valuation, but that no such
increase shall be permitted contrary to a lawful limitation of
liability contained in the warehouseman's tariff, if any. No such
limitation is effective with respect to the warehouseman's
liability for conversion to his own use.

/* The code here changes the general rule that the parties may by
contract set their liability in this chapter. The warehouse is in
effect forced to accept higher liability when the higher
valuation is paid, acting as a form of an insurance company. */

    (3) Reasonable provisions as to the time and manner of
presenting claims and instituting actions based on the bailment
may be included in the warehouse receipt or tariff.

    (4)    This section does not impair or repeal...

Note: Insert in subsection (4) a reference to any statute which
imposes a higher responsibility upon the warehouseman or
invalidates contractual limitations which would be permissible
under this Article.

    7-205. Title Under Warehouse Receipt Defeated in Certain
Cases.

    A buyer in the ordinary course of business of fungible
goods sold and delivered by a warehouseman who is also in the
business of buying and selling such goods takes free of any claim
under a warehouse receipt even though it has been duly
negotiated.

/* Mirroring the provisions regarding a merchant seller in
Article 2. */

    7-206. Termination of Storage at Warehouseman's Option.

    (1) A warehouseman may on notifying the person on whose
account the goods are held and any other person known to claim an
interest in the goods require payment of any charges and removal
of the goods from the warehouse at the termination of the period
of storage fixed by the document, or, if no period is fixed,
within a stated period not less than thirty days after the
notification. If the goods are not removed before the date
specified in the notification, the warehouseman may sell them in
accordance with the provisions of the section on enforcement of a
warehouseman's lien (Section 7-210).

    (2) If a warehouseman in good faith believes that the
goods are about to deteriorate or decline in value to less than
the amount of his lien within the time prescribed in subsection
(1) for notification, advertisement and sale, the warehouseman
may specify in the notification any reasonable shorter time for
removal of the goods and in case the goods are not removed, may
sell them at public sale held not less than one week after a
single advertisement or posting.

    (3)  If as a result of a quality or condition of the
goods of which the warehouseman had no notice at the time of
deposit the goods are a hazard to other property or to the
warehouse or to persons, the warehouseman may sell the goods at
public or private sale without advertisement on reasonable
notification to all persons known to claim an interest in the
goods. If the warehouseman after a reasonable effort is unable to
sell the goods he may dispose of them in any lawful manner and
shall incur no liability by reason of such disposition.

    (4) The warehouseman must deliver the goods to any person
entitled to them under this Article upon due demand made at any
time prior to sale or other disposition under this section.

    (5) The warehouseman may satisfy his lien from the
proceeds of any sale or disposition under this section but must
hold the balance for delivery on the demand of any person to whom
he would have been bound to deliver the goods.

7-207. Goods Must Be Kept Separate; Fungible Goods.

    (1) Unless the warehouse receipt otherwise provides, a
warehouseman must keep separate the goods covered by each receipt
so as to permit at all times identification and delivery of those
goods except that different lots of fungible goods may be
commingled.

    (2) Fungible goods so commingled are owned in common by
the persons entitled thereto and the warehouseman is severally
liable to each owner for that owner's share. Where because of
overissue a mass of fungible goods is insufficient to meet all
the receipts which the warehouseman has issued against it, the
persons entitled include all holders to whom overissued receipts
have been duly negotiated.

    7-208. Altered Warehouse Receipts.

    Where a blank in a negotiable warehouse receipt has been
filled in without authority, a purchaser for value and without
notice of the want of authority may treat the insertion as
authorized. Any other unauthorized alteration leaves any receipt
enforceable against the issuer according to its original tenor.

    7-209. Lien of Warehouseman.

    (1) A warehouseman has a lien against the bailor on the
goods covered by a warehouse receipt or on the proceeds thereof
in his possession for charges for storage or transportation
(including demurrage and terminal charges), insurance, labor, or
charges present or future in relation to the goods, and for
expenses necessary for preservation of the goods or reasonably
incurred in their sale pursuant to law. If the person on whose
account the goods are held is liable for like charges or expenses
in relation to other goods whenever deposited and it is stated in
the receipt that a lien is claimed for charges and expenses in
relation to other goods, the warehouseman also has a lien against
him for such charges and expenses whether or not the other goods
have been delivered by the warehouseman. But against a person to
whom a negotiable warehouse receipt is duly negotiated a
warehouseman's lien is limited to charges in an amount or at a
rate specified on the receipt or if no charges are so specified
then to a reasonable charge for storage of the goods covered by
the receipt subsequent to the date of the receipt.

    (2) The warehouseman may also reserve a security interest
against the bailor for a maximum amount specified on the receipt
for charges other than those specified in subsection (1), such as
for money advanced and interest. Such a security interest is
governed by the Article on Secured Transactions (Article 9).

    (3) (a) A warehouseman's lien for charges and expenses
under subsection (1) or a security interest under subsection (2)
is also effective against any person who so entrusted the bailor
with possession of the goods that a pledge of them by him to a
good faith purchaser for value would have been valid but is not
effective against a person as to whom the document confers no
right in the goods covered by it under Section 7-503.

    (b) A warehouseman's lien on household goods for charges
and expenses in relation to the goods under subsection (1) is
also effective against all persons if the depositor was the legal
possessor of the goods at the time of deposit. "Household goods"
means furniture, furnishings and personal effects used by the
depositor in a dwelling.

    (4) A warehouseman loses his lien on any goods which he
voluntarily delivers or which he unjustifiably refuses to
deliver.

7-219. Enforcement of Warehouseman's Lien.

    (1) Except as provided in subsection (2), a
warehouseman's lien may be enforced by public or private sale of
the goods in block or in parcels, at any time or place and on any
terms which are commercially reasonable, after notifying all
persons known to claim an interest in the goods. Such
notification must include a statement of the amount due, the
nature of the proposed sale and the time and place of any public
sale. The fact that a better price could have been obtained by a
sale at a different time or in a different method from that
selected by the warehouseman is not of itself sufficient to
establish that the sale was not made in a Commercially reasonable
manner. If the warehouseman either sells the goods in the usual
manner in any recognized market therefor, or if he sells at the
price current in such market at the time of his sale, or if he
has otherwise sold in conformity with commercially reasonable
practices among dealers in the type of goods sold, he has sold in
a commercially reasonable manner. A sale of more goods than
apparently necessary to be offered to insure satisfaction of the
obligation is not commercially reasonable except in cases covered
by the preceding sentence.
/* Mirroring the provisions of article 9, section 504. */

    (2) A warehouseman's lien on goods other than goods
stored by a merchant in the course of his business may be
enforced only as follows:

    (a) All persons known to claim an interest in the goods
must be notified.

    (b) The notification must be delivered in person or sent
by registered or certified letter to the last known address of
any person to be notified.

    (c) The notification must include an itemized statement
of the claim, a description of the goods subject to the lien, a
demand for payment within a specified time not less than ten days
after receipt of the notification, and a conspicuous statement
that unless the claim is paid within that time the goods will be
advertised for sale and sold by auction at a specified time and
place.

    (d) The sale must conform to the terms of the
notification.

    (e) The sale must be held at the nearest suitable place
to that where the goods are held or stored.

    (f) After the expiration of the time given in the
notification, an advertisement of the sale must be published once
a week for two weeks consecutively in a newspaper of general
circulation where the sale is to be held. The advertisement must
include a description of the goods, the name of the person on
whose account they are being held, and the time and place of the
sale. The sale must take place at least fifteen days after the
first publication. If there is no newspaper of general
circulation where the sale is to be held, the advertisement must
be posted at least ten days before the sale in not less than six
conspicuous places in the neighborhood of the proposed sale.

    (3) Before any sale pursuant to this section any person
claiming a right in the goods may pay the amount necessary to
satisfy the lien and the reasonable expenses incurred under this
section. In that event the goods must not be sold, but must be
retained by the warehouseman subject to the terms of the receipt
and this Article.

    (4)  The warehouseman may buy at any public sale pursuant
to this section.

    (5) A purchaser in good faith of goods sold to enforce a
warehouseman's lien takes the goods free of any rights of persons
against whom the lien was valid, despite noncompliance by the
warehouseman with the requirements of this section.

    (6) The warehouseman may satisfy his lien from the
proceeds of any sale pursuant to this section but must hold the
balance, if any, for delivery on demand to any person to whom he
would have been bound to deliver the goods.

    (7) The rights provided by this section shall be in
addition to all other rights allowed by law to a creditor against
his debtor.

    (8) Where a lien is on goods stored by a merchant in the
course of his business the lien may be enforced in accordance
with either subsection (1) or (2).

    (9) The warehouseman is liable for damages caused by
failure to comply with the requirements for sale under this
section and in case of willful violation is liable for
conversion.


PART 3
BILLS OF LADING: SPECIAL PROVISIONS

    7-301. Liability for Non-receipt or Misdescription; "Said
to Contain"; "Shipper's Load and Count"; Improper Handling.

    (1) A consignee of a non-negotiable hill who has given
value in good faith or a holder to whom a negotiable bill has
been duly negotiated relying in either case upon the description
therein of the goods, or upon the date therein shown, may recover
from the issuer damages caused by the misdating of the bill or
the non-receipt or misdescription of the goods, except to the
extent that the document indicates that the Issuer does not know
whether any part or all of the goods in fact were received or
conform to the description, as where the description is in terms
of marks or labels or kind, quantity, or condition or the receipt
or description is qualified by "contents or condition of contents
of packages unknown", "said to contain", "shipper's weight, load
and count" or the like, if such indication be true.

    (2) When goods are loaded by an issuer who is a common
carrier, the issuer must count the packages of goods if package
freight and ascertain the kind and quantity of bulk freight. In
such cases "shipper's weight, load and count" or other words
indicating that the description was made by the shipper are
ineffective except as to freight concealed by packages.

    (3) When bulk freight is loaded by a shipper who makes
available to the issuer adequate facilities for weighing such
freight, an issuer who is a common carrier must ascertain the
kind and quantity within a reasonable time after receiving the
written request of the shipper to do so. In such cases "shipper's
weight" or other words of like purport are ineffective.

    (4) The issuer may by inserting in the bill the words
"shipper's weight, load and count" or other words of like purport
indicate that the goods were loaded by the shipper; and if such
statement be true the issuer shall not be liable for damages
caused by the improper loading. But their omission does not imply
liability for such damages.

    (5) The shipper shall be deemed to have guaranteed to the
issuer the accuracy at the time of shipment of the description,
marks, labels, number, kind, quantity, condition and weight, as
furnished by him; and the shipper shall indemnify the issuer
against damage caused by inaccuracies in such particulars. The
right of the issuer to such indemnity shall in no way limit his
responsibility and liability under the contract of carriage to
any person other than the shipper.

7-302. Through Bills of Lading and Similar Documents.

    (1) The issuer of a through bill of lading or other
document embodying an undertaking to be performed in part by
persons acting as its agents or by connecting carriers is liable
to anyone entitled to recover on the document for any breach by
such other persons or by a connecting carrier of its obligation
under the document but to the extent that the bill covers an
undertaking to be performed overseas or in territory not
contiguous to the continental United States or an undertaking
including matters other than transportation this liability may be
varied by agreement of the parties.

    (2) Where goods covered by a through bill of lading or
other document embodying an undertaking to be performed in part
by persons other than the issuer are received by any such person,
he is subject with respect to his own performance while the goods
are in his possession to the obligation of the issuer. His
obligation is discharged by delivery of the goods to another such
person pursuant to the document, and does not include liability
for breach by any other such persons or by the issuer.

    (3)  The issuer of such through bill of lading or other
document shall be entitled to recover from the connecting carrier
or such other person in possession of the goods when the breach
of the obligation under the document occurred, the amount it may
be required to pay to anyone entitled to recover on the document
therefor, as may be evidenced by any receipt, judgment, or
transcript thereof, and the amount of any expense reasonably
incurred by it in defending any action brought by anyone entitled
to recover on the document therefor.

7-303. Diversion; Reconsignment; Change of Instructions.

    (1) Unless the bill of lading otherwise provides, the
carrier may deliver the goods to a person or destination other
than that stated in the bill or may otherwise dispose of the
goods on instructions from

    (a) the holder of a negotiable bill; or

    (b) the consignor on a non-negotiable bill
notwithstanding contrary instructions from the consignee; or

    (c) the consignee on a non-negotiable bill in the absence
of contrary instructions from the consignor, if the goods have
arrived at the billed destination or if the consignee is in
possession of the bill; or

    (d) the consignee on a non-negotiable bill if he is
entitled as against the consignor to dispose of them.

    (2) Unless such instructions are noted on a negotiable
bill of lading, a person to whom the bill is duly negotiated can
hold the bailee according to the original terms.

7-304. Bills of Lading in a Set

    (1) Except where customary in overseas transportation, a
bill of lading must not be issued in a set of parts. The issuer
is liable for damages caused by violation of this subsection.

    (2) Where a bill of lading is lawfully drawn in a set of
parts, each of which is numbered and expressed to be valid only
if the goods have not been delivered against any other part, the
whole of the parts constitute one bill.

    (3) Where a bill of lading is lawfully issued in a set of
parts and different pans are negotiated to different persons, the
title of the holder to whom the first due negotiation is made
prevails as to both the document and the goods even though any
later holder may have received the goods from the carrier in good
faith and discharged the carrier's obligation by surrender of his
part.

    (4) Any person who negotiates or transfers a single part
of a bill of lading drawn in a set is liable to holders of that
part as if it were the whole set.

    (5)  The bailee is obliged to deliver in accordance with
Part 4 of this Article against the first presented part of a hill
of lading lawfully drawn in a set. Such delivery discharges the
bailee's obligation on the whole bill.

7-305. Destination Bills.

    (1) Instead of issuing a bill of lading to the consignor
at the place of shipment a carrier may at the request of the
consignor procure the bill to be issued at destination or at any
other place designated in the request.

    (2) Upon request of anyone entitled as against the
carrier to control the goods while in transit and on surrender of
any outstanding bill of lading or other receipt covering such
goods, the issuer may procure a substitute bill to be issued at
any place designated in the request.

7-306. Altered Bills of Lading.

An unauthorized alteration or filling in of a blank in a bill of
lading leaves the bill enforceable according to its original
tenor.

7-307. Lien of Carrier.

    (1) A carrier has a lien on the goods covered by a bill
of lading for charges subsequent to the date of its receipt of
the goods for storage or transportation (including demurrage and
terminal charges) and for expenses necessary for preservation of
the goods incident to their transportation or reasonably incurred
in their sale pursuant to law. But against a purchaser for value
of a negotiable bill of lading a carrier's lien is limited to
charges stated in the bill or the applicable tariffs, or if no
charges are stated then to a reasonable charge.

    (2) A lien for charges and expenses under subsection (1)
on goods which the carrier was required by law to receive for
transportation is effective against the consignor or any person
entitled to the goods unless the carrier had notice that the
consignor lacked authority to subject the goods to such charges
and expenses. Any other lien under subsection (1) is effective
against the consignor and any person who permitted the bailor to
have control or possession of the goods unless the carrier had
notice that the bailor lacked such authority.

    (3) A carrier loses his lien on any goods which he
voluntarily delivers or which he unjustifiably refuses to
deliver.

7-308. Enforcement of Carrier's Lien.

    (1) A carrier's lien may be enforced by public or private
sale of the goods, in block or in parcels, at any time or place
and on any terms which are commercially reasonable, after
notifying all persons known to claim an interest in the goods.
Such notification must include a statement of the amount due, the
nature of the proposed sale and the time and place of any public
sale. The fact that a better price could have been obtained by a
sale at a different time or in a different method from that
selected by the carrier is not of itself sufficient to establish
that the sale was not made in a commercially reasonable manner.
If the carrier either sells the goods in the usual manner in any
recognized market therefor or if he sells at the price current in
such market at the time of his sale or if he has otherwise sold
in conformity with commercially reasonable practices among
dealers in the type of goods sold he has sold in a commercially
reasonable manner. A sale of more goods than apparently necessary
to be offered to ensure satisfaction of the obligation is not
commercially reasonable except in cases covered by the preceding
sentence.

    (2) Before any sale pursuant to this section any person
claiming a right in the goods may pay the amount necessary to
satisfy the lien and the reasonable expenses incurred under this
section. In that event the goods must not be sold, but must be
retained by the carrier subject to the terms of the bill and this
Article.

    (3) The carrier may buy at any public sale pursuant to
this Section.

    (4) A purchaser in good faith of goods sold to enforce a
carrier's lien takes the goods free of any rights of Persons
against whom the lien was valid, despite noncompliance by the
carrier with the requirements of this section.

    (5) The carrier may satisfy his lien from the proceeds of
any sale pursuant to this section but must hold the balance, if
any, for delivery on demand to any person to whom he would have
been bound to deliver the goods.

    (6) The rights provided by this section shall be in
addition to all other rights allowed by law to a creditor against
his debtor.

    (7) A carrier's lien may be enforced in accordance with
either subsection (1) or the procedure set forth in subsection
(2) of Section 7-210.

    (8) The carrier is liable for damages caused by failure
to comply with the requirements for sale under this section and
in case of willful violation is liable for conversion.


7-309. Duty of Care; Contractual Limitation of Carrier's
Liability.

    (1) A carrier who issues a bill of lading whether
negotiable or non-negotiable must exercise the degree of care in
relation to the goods which a reasonably careful man would
exercise under like circumstances. This subsection does not
repeal or change any law or rule of law which imposes liability
upon a common carrier for damages not caused by its negligence.

    (2) Damages may be limited by a provision that the
carrier's liability shall not exceed a value stated in the
document if the carrier's rates are dependent upon value and the
consignor by the carrier's tariff is afforded an opportunity to
declare a higher value or a value as lawfully provided in the
tariff, or where no tariff is filed he is otherwise advised of
such opportunity; but no such limitation is effective with
respect to the carrier's liability for conversion to its own use.

    (3) Reasonable provisions as to the time and manner of
presenting claims and instituting actions based on the shipment
may be included in a bill of lading or tariff.

PART 4
WAREHOUSE RECEIPTS AND BILLS OF LADING: GENERAL OBLIGATIONS

7-401. Irregularities in Issue of Receipt or Bill or Conduct of
Issuer.

The obligations imposed by this Article on an issuer apply to a
document of title regardless of the fact that

    (a) the document may not comply with the requirements of
this Article or of any other law or regulation regarding its
issue, form or content; or

    (b) the issuer may have violated laws regulating the
conduct of his business; or

    (c) The goods covered by the document were owned by the
bailee at the time the document was issued; or

    (d) the person issuing the document does not come within
the definition of warehouseman if it purports to be a warehouse
receipt.

7-402. Duplicate Receipt or Bill; Overissue.

Neither a duplicate nor any other document of title purporting to
cover goods already represented by an outstanding document of the
same issuer confers any right in the goods, except as provided in
the case of bills in a set, overissue of documents for fungible
goods and substitutes for lost, stolen or destroyed documents.
But the issuer is liable for damages caused by his overissue or
failure to identify a duplicate document as such by conspicuous
notation on its face.

7-403. Obligation of Warehouseman or Carrier to Deliver; Excuse.

    (1) The bailee must deliver the goods to a person
entitled under the document who complies with subsections (2) and
(3), unless and to the extent that the bailee establishes any of
the following:

    (a) delivery of the goods to a person whose receipt was
rightful as against the claimant;

    (b) damage to or delay, loss or destruction of the goods
for which the bailee is not liable [, but the burden of
establishing negligence in such cases is on the person entitled
under the document];

Note: The brackets in (1)(h) indicate that State enactments may
differ on this point without serious damage to the principle of
uniformity.

    (c) previous sale or other disposition of the goods in
lawful enforcement of a lien or on warehouseman's lawful
termination of storage;

    (d) the exercise by a seller of his right to stop
delivery pursuant to the provisions of the Article on Sales
(Section 2- 705);

    a diversion, reconsignment or other disposition pursuant
to the provisions of this Article (Section 7-303) or tariff
regulating such right;

    (f) release, satisfaction or any other fact affording a
personal defense against the claimant;

    (g) any other lawful excuse.

    (2) A person claiming goods covered by a document of
title must satisfy the bailee's lien where the bailee so requests
or where the bailee is prohibited by law from delivering the
goods until the charges are paid.

    (3) Unless the person claiming is one against whom the
document confers no right under Sec. 7-503(1), he must surrender
for cancellation or notation of partial deliveries any
outstanding negotiable document covering the goods, and the
bailee must cancel the document or conspicuously note the partial
delivery thereon or be liable to any person to whom the document
is duly negotiated.

    (4)  "Person entitled under the document" means holder in
the case of a negotiable document, or the person to whom delivery
is to be made by the terms of or pursuant to written instructions
under a non-negotiable document.

7-404. No Liability for Good Faith Delivery Pursuant to Receipt
or Bill.

A bailee who in good faith including observance of reasonable
commercial standards has received goods and delivered or
otherwise disposed of them according to the terms of the document
of title or pursuant to this Article is not liable therefor.
This rule applies even though the person from whom he received
the goods had no authority to procure the document or to dispose
of the goods and even though the person to whom he delivered the
goods had no authority to receive them.


PART 5
WAREHOUSE RECEIPTS AND BILLS OF LADING:
NEGOTIATION AND TRANSFER

7-501. Form of Negotiation and Requirements of "Due Negotiations"

(1) A negotiable document of title running to the order of a
named person is negotiated by his indorsement and delivery.
After his indorsement in blank or to bearer any person can
negotiate it by delivery alone.

(2) (a) A negotiable document of title is also negotiated by
delivery alone when by its original terms it runs to bearer.

    (b) When a document running to the order of a named
person is delivered to him the effect is the same as if the
document had been negotiated

(3) Negotiation of a negotiable document of title after it has
been indorsed to a specified person requires indorsement by the
special indorsee as well as delivery.

(4) A negotiable document of title is "duly negotiated" when it
is negotiated in the manner stated in this section to a holder
who purchases it in good faith without notice of any defense
against or claim to it on the part of any person and for value
unless it is established that the negotiation is not in the
regular course of business or financing or involves receiving the
document in settlement or payment of a money obligation.

(5) Indorsement of a non-negotiable document neither makes it
negotiable nor adds to the transferee's rights.

(6) The naming in a negotiable bill of a person to be notified of
the arrival of the goods does not limit the negotiability of the
bill nor constitute notice to a purchaser thereof of any interest
of such person in the goods.

7-502. Rights Acquired by Due Negotiation

(1) Subject to the following section and to the provisions of
Section 7-205 on fungible goods, a holder to whom a negotiable
document of title has been duly negotiated acquires thereby:

    (a) title to the document;

    (b) title to the goods;

    (c) all rights accruing under the law of agency or
estoppel, including rights to goods delivered to the bailee after
the document was issued; and

    (d) the direct obligation of the issuer to hold or
deliver the goods according to the terms of the document free of
any defense or claim by him except those arising under the terms
of the document or under this Article. In the case of a delivery
order the bailee's obligation accrues only upon acceptance and
the obligation acquired by the holder is that the issuer and any
indorser will procure the acceptance of the bailee.

    (2) Subject to the following section, title and rights so
acquired are not defeated by any stoppage of the goods
represented by the document or by surrender of such goods by the
bailee, and are not impaired even though the negotiation or any
prior negotiation constituted a breach of duty or even though any
person has been deprived of possession of the document by
misrepresentation, fraud, accident, mistake, duress, loss, theft
or conversion, or even though a previous sale or other transfer
of the goods or document has been made to a third person.

7-503. Document of Title to Goods Defeated in Certain Cases.

    (1) A document of title confers no right in goods against
a person who before issuance of the document had a legal interest
or a perfected security interest in them and who neither

    (a) delivered or entrusted them or any document of title
covering them to the bailor or his nominee with actual or
apparent authority to ship, store or sell or with power to obtain
delivery under this Article (Section 7-403) or with power of
disposition under this Act (Sections 2-403 and 9-307) or other
statute or rule of law; nor

    (b) acquiesced in the procurement by the bailor or his
nominee of any document of title.

    (2) Title to goods based upon an unaccepted delivery
order is subject to the rights of anyone to whom a negotiable
warehouse receipt or bill of lading covering the goods has been
duly negotiated. Such a title may be defeated under the next
section to the same extent as the rights of the issuer or a
transferee from the issuer.

    (3) Title to goods based upon a bill of lading issued to
a freight forwarder is subject to the rights of anyone to whom a
bill issued by the freight forwarder is duly negotiated; but
delivery by the carrier in accordance with Part 4 of this Article
pursuant to its own bill of lading discharges the carrier's
obligation to deliver.

7-504. Rights Acquired in the Absence of Due Negotiation; Effect
of Diversion; Seller's Stoppage of Delivery.

    (1) A transferee of a document, whether negotiable or
non- negotiable, to whom the document has been delivered but not
duly negotiated, acquires the title and rights which his
transferor had or had actual authority to convey.

    (2) In the case of a non-negotiable document, until but
not after the bailee receives notification of the transfer, the
rights of the transferee may be defeated

    (a) by those creditors of the transferor who could treat
the sale as void under Section 2-402; or

    (b) by a buyer from the transferor in ordinary course of
business if the bailee has delivered the goods to the buyer or
received notification of his rights; or

    (c) as against the bailee by good faith dealings of the
bailee with the transferor.

(3) A diversion or other change of shipping instructions by the
consignor in a non-negotiable bill of lading which causes the
bailee not to deliver to the consignee defeats the consignee's
title to the goods if they have been delivered to a buyer in
ordinary course of business and in any event defeats the
consignee's rights against the bailee.

(4) Delivery pursuant to a non-negotiable document may be stopped
by a seller under Section 2-705, and subject to the requirement
of due notification there provided. A bailee honoring the
seller's instructions is entitled to be indemnified by the seller
against any resulting loss or expense.

7-505. Indorser Not a Guarantor for Other Panics.

The indorsement of a document of title issued by a bailee does
not make the indorser liable for any default by the bailee or by
previous indorsers.

7-506. Delivery Without Indorsement: Right to Compel Indorsement.

The transferee of a negotiable document of title has a
specifically enforceable right to have his transferor supply any
necessary indorsement but the transfer becomes a negotiation only
as of the time the indorsement is supplied.

7-507. Warranties on Negotiation or Transfer of Receipt or Bill.

Where a person negotiates or transfers a document of title for
value otherwise than as a mere intermediary under the next
following section, then unless otherwise agreed he warrants to
his immediate purchaser only in addition to any warranty made in
selling the goods

    (a) that the document is genuine; and

    (b) that he has no knowledge of any fact which would
impair its validity or worth; and

    (c) that his negotiation or transfer is rightful and
fully effective with respect to the title to the document and the
goods it represents.

7-508. Warranties of Collecting Bank as to Documents.

A collecting bank or other intermediary known to be entrusted
with documents on behalf of another or with collection of a draft
or other claim against delivery of documents warrants by such
delivery of the documents only its own good faith and authority.
This rule applies even though the intermediary has purchased or
made advances against the claim or draft to be collected.

7-509 Receipt or Bill: When Adequate Compliance With Commercial
Contract.

The question whether a document is adequate to fulfill the
obligations of a contract for sale or the conditions of a credit
is governed by the Articles on Sales (Article 2) and on Letters
of Credit (Article 5).

PART 6
WAREHOUSE RECEIPTS AND BILLS OF LADING:
MISCELLANEOUS PROVISIONS

7-601. Lost and Missing Documents.

(1) If a document has been lost, stolen or destroyed, a consignor
may order delivery of the goods or issuance of a substitute
document and the bailee may without liability to any person
comply with such order. If the document was negotiable the
claimant must post security approved by the coon to indemnify any
person who may suffer loss as a result of non-surrender of the
document. If the document was not negotiable, such security may
be required at the discretion of the court. The court may also in
its discretion order payment of the bailee's reasonable costs and
counsel fees.

(2) A bailee who without court order delivers goods to a person
claiming under a missing negotiable document is liable to any
person injured thereby, and if the delivery is not in good faith
becomes liable for conversion. Delivery in good faith is not
conversion if made in accordance with a filed classification or
tariff or, where no classification or tariff is filed, if the
claimant posts security with the bailee in an amount at least
double the value of the goods at the time of posting to indemnify
any person injured by the delivery who files a notice of claim
within one year after the delivery.

7-602. Attachment of Goods Covered by a Negotiable Document.
Except where the document was originally issued upon
delivery of the goods by a person who had no power to dispose of
them, no lien attaches by virtue of any judicial process to goods
in the possession of a bailee for which a negotiable document of
title is outstanding unless the document be first surrendered to
the bailee or its negotiation enjoined, and the bailee shall not
be compelled to deliver the goods pursuant to process until the
document is surrendered to him or impounded by the court. One who
purchases the document for value without notice of the process or
injunction takes free of the lien imposed by judicial process.

7-603. Conflicting Claims; Interpleader.

If more than one person claims title or possession of the goods,
the bailee is excused from delivery until he has had a reasonable
time to ascertain the validity of tile adverse claims or to bring
an action to compel all claimants to interplead and may compel
such interpleader, either in defending an action for non-delivery
of the goods, or by original action, whichever is appropriate.